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More Guidance on Medicaid Expansion Released by CMS

Enhanced Federal Matching Funds for the “Newly Eligible”: On March 29, 2013, CMS released a final rule implementing the statutory increases in federal matching funds for the cost of providing care to individuals newly eligible for Medicaid via the expansion under PPACA. Specifically, beginning in 2014, states will receive 100% federal matching funds for the cost of their care. After the first three years, the federal contribution will be phased down, dropping to 90% in 2020 and subsequent years. As the enhanced federal matching funds are generally only available for individuals who qualify as “newly eligible” (i.e., not eligible for Medicaid on December 1, 2009), the regulations also propose a “simple and accurate method” for states to claim the higher rates for this group. The agency is still accepting comments on this aspect of the rule.

Note, however, that enhanced matching funds are in some cases available for individuals who are not “newly eligible.” Specifically, certain states that had already extended Medicaid eligibility to parents and childless adults – referred to as “expansion states” – will receive an enhanced federal match for individuals in the expansion population even though they are not technically “newly eligible.” In addition, some expansion states (namely Massachusetts and Vermont) will receive a temporary general increase in federal matching funds of 2.2% during 2014 and 2015.

Options for Premium Assistance: Also on March 29, CMS released an FAQ indicating that the agency will allow states to experiment with alternative approaches to the Medicaid expansion. While reiterating its position that a “partial expansion” will not be permitted, CMS noted that states may cover beneficiaries via premium assistance, provided that such arrangements are “cost effective” and afford beneficiaries the benefits and cost-sharing protections otherwise available under Medicaid. CMS also articulated that states wishing to expand their Medicaid program using qualified health plans offered through Exchanges may seek a Medicaid waiver in order to do so, and outlined certain criteria necessary for CMS’ consideration of such waiver proposals.